David v Goliath tussle in 'lease v licence' dispute

Workers cleaning a facade of the JTC Building in Fusionopolis. iHub said FLEL even dragged in land owner JTC Corp by sending the extension to JTC for approval when it was unnecessary.
Workers cleaning a facade of the JTC Building in Fusionopolis. iHub said FLEL even dragged in land owner JTC Corp by sending the extension to JTC for approval when it was unnecessary. PHOTO: ST FILE

SME says ex-landlord delayed extension; latter says firm was granted licence, not lease

A home-grown logistics company is taking to court its fight with a landlord many times its size.

Local supply chain services provider iHub Solutions has sued its former landlord, Freight Links Express Logisticentre (FLEL), in the High Court over a rental dispute that happened in 2013.

iHub, a small and medium-sized enterprise (SME) set up in 2000, has a paid-up capital of $100,000, according to company records.

FLEL is owned by Singapore Exchange-listed Vibrant Group, which has a market capitalisation of about $40 million. At the centre of the spat is about 40,000 sq ft of office and warehouse space that iHub rented from July 2005 to October 2013 in a warehouse owned by FLEL in Penjuru Road, in Jurong.

When iHub wanted to extend the lease after October 2013, it pointed to a clause in its agreement with the landlord that gave it an option to extend for three years, with the rental hike capped at 10 per cent. It said in court papers it approached the landlord six months before the term was up, but the landlord dragged its feet because it wanted to raise rent by more than 50 per cent.

As negotiations stalled, iHub charged that FLEL took steps to hinder its business. These included "unjustifiable restrictions on carparking spaces" and the "improper parking of containers which obstructed access and/or made it unsafe". It said FLEL even dragged in land owner JTC Corp by sending the extension to JTC for approval when it was unnecessary to do so.

The SME said the landlord had "misrepresented to JTC" that FLEL was managing the space and providing logistics services to iHub when it was not. "The motivation for doing so appears to be an attempt to circumvent the JTC 50-50 rule - that is, at least 50 per cent of the building must be operated by the defendants," said iHub in its court papers.

Without the extension, iHub had to move to another warehouse and said it suffered losses of $805,000, which it is suing to recover.

The landlord denies the charges.

It said in court papers that the SME was not granted a lease but a "licence" to operate at the premises, paying a "monthly service charge", not a "rent".

It said it "had not failed, refused or neglected to confirm the extension", noting that it had e-mailed the SME about two months before the end of the term to confirm the renewal. The SME was aware that the continued use of the premises was subject to JTC's approval, it added.

FLEL said the suggestion of its misrepresentation to JTC was "a baseless attempt by the plaintiff to impute bad faith on the part of the defendant".

It argued that it did not give any impression it would evict the company and, in fact, JTC subsequently approved in December for the firm to continue to use the premises as a sub-tenant and not a licensee.

The landlord also denied that it hindered iHub's business. It said the company had asked for two parking spaces and was given one. As for using containers to block access to the company, the landlord said it was "a complete fabrication".

It accuses iHub of being "mischievous" in bringing the suit to "falsely gain a windfall" at its expense.

iHub is represented by Mr Dominic Chan and Mr Daniel Goh of Characterist LLC, while Ari, Goh & Partners is representing FLEL. The case is scheduled to be heard in October.

A version of this article appeared in the print edition of The Straits Times on April 18, 2016, with the headline 'David v Goliath tussle in 'lease v licence' dispute'. Print Edition | Subscribe